Pros and Cons of Sole Proprietorship in Singapore?

What are the Pros and Cons of Singapore Sole Proprietorship?

What are the advantages and disadvantages of a Sole Proprietorship in Singapore?

What are the plus and minus of a Sole Proprietorship in Singapore?

What are the Pros and Cons of Singapore Sole Proprietorship?

What are the advantages and disadvantages of a Singapore Sole Proprietorship?

What are the plus and minus of a Singapore Sole Proprietorship?

Merits and demerits of sole proprietorship.

Advantages / Pros of Sole Proprietorship:

• It is an easy procedure to register a sole-proprietorship.
• It is easy and quick to start trading as a sole trader as there are no formalities to comply with other than notifying the Tax Authorities.
• The business itself is flexible. Any decisions and changes can be made easily as there is only one person to make the relevant choices.
• All the profits generated by the business will belong to the sole-trader.
• Sole-traders own their business and so are able to sell or transfer the business assets & liabilities as they wish.
• One of the advantages of this form of business is that there are fewer formalities in terms of its formation and registration.
• Pay income tax for your trade income at individual income tax rate.
• CPF contribution is not mandatory.
• Due to flexible structure it’s easy to convert into Partnership just by adding another person as a Partner.

Disadvantages / Cons of Sole Proprietorship:

• A sole-trader has unlimited liability. This means that if the business should collapse, the sole-trader could loose not only the cash and other assets invested in the business but all his/her personal assets as well excluding HDB flat, to meet the debts of the business.
• As there is only one person with overall responsibility for the success of the business this may increase the pressure on that individual.
• A sole-proprietorship is a business firm owned by one person or one locally incorporated company. There are no partners. The sole-proprietor has absolute say in the running of the business firm. Management rests on that one person and his liability is unlimited.
• There is no requirement for a sole-trader to maintain accounts for auditing purposes however the records shall be kept for five years. For tax purposes, a balance sheet or statement of affairs as at the end of the year and a detailed profit and loss account must be submitted to the tax authorities.
• If such a business fails or is declared bankrupt, the creditors can sue the proprietor for all debts incurred. A legal claim can be made against the personal assets of the proprietor.
• In addition to personal income tax the owner is mandatorily required to top-up his/her Medisave Account for the net trade income after tax assessment
• Sole Proprietor could not transfer the ownership of Firm however the assets & liabilities of the Firm could be easily transferred to another person.